After rapid expansion in the three years since its inception, ownership of the Kidscape Creative Learning Centre has been transferred from its creator, distributor Dataflow Computer Services, to retailer Harvey Norman.
Prior to May 15, all Kidscape stores were owned by Dataflow, which supplied all stock and bore the costs of fixtures and fittings and specialist staff. With Kidscape now in 22 stores across Australia, that overhead was becoming a significant retail management issue that Dataflow managing director Jeffrey Tobias said "is not our core competency".
After an undisclosed financial transaction, Harvey Norman now plans to implement Kidscape into 52 of its 68 stores nationally. Tobias told ARN that although Dataflow had conceived Kidscape, it was time to do what was best for the baby and pass control over to retailing experts.
"Not a lot has changed. We will still be supplying stock, but Harvey Norman has the infrastructure to most effectively develop and manage future growth," said Tobias.
"The only significant difference is that we no longer have 100 per cent of the shelf space, but as we distribute about 80 per cent of educational software, we'll still end up with most of it. The overhead of employing 25 sales staff, seven days a week was not worth retaining the extra 20 per cent of shelf space.
"We just wanted to concentrate on what we do best and that is distributing - not retailing."
Naturally, acquiring Kidscape is also seen as good news by the retailing giant. Tony Gattari, Harvey Norman's general manager, computers and communication, said that to convince customers Kidscape was a true learning centre, it had to reflect what the whole market was offering -- not just Dataflow's products.
According to Gattari, as well as boosting turnover, Kidscape gave Harvey Norman a unique feature that differentiated it from other retailers.
"Kidscape is now part of the plan to make Harvey Norman stores more interesting to visit in the face of expected challenges from Internet commerce. It also gives us the chance to win new customers at an early age and then retain them for the rest of their lives," he said.
Both parties were adamant the relationship between Dataflow and Harvey Norman is stronger than ever as a result of the Kidscape joint venture and that its new structure was a win-win situation, not only for them but also for customers and vendors.